Federal Labor leader Anthony Albanese and NSW party leader Jodi McKay have announced the initial response to a review following allegations the state branch accepted donations from banned developers.
Photograph: Mick Tsikas/AAP

The New South Wales Labor party will create new powers to sack its general secretary and set up an internal audit and risk committee able to blow the whistle on breaches to external regulators.

The report noted that although that most recent incident was “bad enough”, the last two secretaries had left “following damaging controversies”, none of the last six secretaries had served full terms and “an earlier [independent commission against corruption] inquiry led to the conviction of two former Labor state ministers”.

Under the proposed changes, NSW Labor will have a president elected by 75% of its conference – ensuring the position is not controlled by any one faction – to function as a chair of the new state executive board.

The NSW general secretary – akin to a chief executive – will still be responsible for day-to-day running of the branch, but Lavarch said the job would now come with a “proper definition of the role”, key performance indicators and rules on delegation of powers to other officers.

The secretary will be barred from seeking elected office for five years from the date of their appointment.

The nine-member state executive board will consist of the president, three vice-presidents and five other board members, also elected by 75% of conference.

The board in turn will appoint the four members of a new structurally separate audit and risk committee, whose members can be drawn from outside the party.

Lavarch said that would ensure that the political and compliance sides of the party would be separated to “remove confusion between management and oversight”.

McKay said she would prefer the audit and risk committee be non-members, praising the new structures for creating “checks and balances that we have been missing as a political party”.

Albanese said the reforms “about accountability, transparency [and] increasing democracy” would “change the culture” of the branch.

“These structural reforms will ensure the NSW branch never again commits the sort of mistakes we’ve seen that have lead to embarrassment of ordinary party members about the activities that have occurred in recent years.”

McKay described the changes as “sweeping”, highlighting the importance of improved accountability for the general secretary, including that they can be sacked for poor performance.

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Under the rules the secretary and assistant secretaries can be sacked by 75% of the 40-person administrative committee, an existing structure which survives the reforms.

“We’ve had a difficult time in the past and I think what the events of the Icac showed is that we need to have a mechanism in place that when the general secretary didn’t perform … that they could be released from that role,” McKay said.

Albanese said the reforms cured the “papal infallibility” of the general secretary.

McKay said the final report would deal with Labor action committees, such as Chinese Friends of Labor.